MAC is a member owned heterogeneous group captive domiciled in the Cayman Islands. Each Shareholder represents a single and equal vote on MAC’s Board of Directors regardless of premium size.

MAC’s premium is developed through the use of an actuarially determined loss forecast. The actuary will use five years of loss history for all lines of coverage; generally, this includes Workers’ Compensation, General Liability, Auto Liability, and Auto Physical Damage. The loss funding, derived from the actuarial forecast, is broken-out into two categories by the actuary known as the “A & B” Funds. The “A” Fund pays for the first $100,000 of any loss and the “B” Fund contributes to the remainder of the company’s loss layer up to $350,000 total per occurrence. In addition, the concept of risk sharing and risk shifting is important to MAC for deductibility purposes. MAC is designed by its members to have a degree of risk sharing at an acceptable level. A complete copy of the premium formula is available in our offering memorandum.

Simply put, expected losses are funded by the member and remain in that member’s individual equity account, within MAC, until losses are paid. Members receive investment income on their equity balance until that specific underwriting year is closed. The tail liability for a mature underwriting year is sold into MAC’s rolling internal tail fund and the remaining equity balances, including investment income, are disbursed in correlation to the final performance of each member.

Purchasing both specific and aggregate excess insurance protects MAC and its members. Specific excess reinsurance protects the captive against a single catastrophic loss. The aggregate excess protects the captive against a high number of frequency losses that fall within MAC’s retained limit. Combined, these coverages provide MAC members with the comfort of a loss “cap” at a predetermined level for each policy year, a virtual box of predictable risk. The “maximum” premium in MAC is two times the “A” Fund plus the “B” Fund plus operating costs. The concept is based upon controlling the predictable losses and insuring away the unpredictable losses.

As was mentioned, each captive member has a potential maximum of one additional “A” Fund. As a result, each member must provide letter of credit or cash security equal to 2/3rd’s of their “A” Fund. An additional 2/3rd’s of “A” will be posted for each additional underwriting year up to a maximum 200% the average “A” Fund for the last three years of participation. This provides member to member security, capitalization for the captive, and supports a single back to back letter of credit to the policy issuing carrier (The Hartford) who is the ultimate financial guarantor for the captive.